The ongoing court battle between the British government and exiles from Diego Garcia, who had lived for 40 years in Mauritius, continued through much of 2008. Following a series of government appeals to prevent island resettlement, British lawmakers in July argued that the islanders and their descendents should be allowed to return immediately. Some 2,000 residents of the Chagos Islands had been forced to leave the Indian Ocean archipelago, a British protectorate, when the British government brokered a deal with the United States to lease the largest island, Diego Garcia, as an air base. Diego Garcia was used more recently as a base for U.S. military forces engaged in the Afghanistan and Iraq wars. The British High Court in 2000 and the Court of Appeals in 2007 had ruled in favour of the Chagossians’ right to return, but in October 2008 that ruling was overturned in the House of Lords.

In a bid to strengthen trade ties with China, the Mauritian government agreed to a $730 million project, the country’s largest foreign direct investment, to build a trade-development zone that would house several Chinese businesses. Mauritius’s two main economic sectors, sugarcane and textiles, had suffered downturns since the lifting in 2005 of trade preferences, and officials hoped the deal would result in making the country a centre for regional economic development.